Advocating for the Industry: American Fuel & Petrochemical Manufacturers with Rob Benedict

How does the American Fuel & Petrochemical Manufacturers advocate for the chemical industry? Victoria Meyer talks with Rob Benedict, the Senior Director of Petrochemicals, Transportation, and Infrastructure for American Fuel & Petrochemical Manufacturers (AFPM). Rob shares the key initiatives and focus for AFPM. Rob discusses its position on creating greater competition in railroads and transportation, to be more competitive and effective for the chemical industry, including its recent engagement with the Surface Transportation Board. The role of AFPM in supporting industry sustainability, including advanced recycling. And, its engagement with other industry groups to provide an effective platform and advocacy for the chemical industry. If you want to learn what’s next, join in the conversation.

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Advocating for the Industry: American Fuel & Petrochemical Manufacturers with Rob Benedict

I am talking with Rob Benedict, who is Senior Director of Petrochemicals Transportation and Infrastructure for AFPM, sometimes known as American Fuel and Petrochemical Manufacturers. He has a wealth of experience in transportation and elsewhere. His previous role was at the US Department of Transportation. He’s been pretty active even at AFPM in those spaces. We’re going to know about that and more. Rob, welcome to the show.

Thank you for having me. It’s great to be here.

Let’s start. What’s your origin story? How did you end up working in an industry group? You’ve had a transportation focus, although it’s a little bit broader now with AFPM. How did you get here?

I’ve always been into science. I got my degree from Wake Forest University in Biology. Straight out of college, I went and worked for a lab in a major chemical company in Delaware. I had worked there, and that’s when I got first exposed to transportation because we had to ship a lot of things. A lot of things could be considered hazardous materials.

I got exposed to the shipping world there. I love Delaware, but I wanted to move to the city. I found a job with the US Department of Transportation in a small agency called the Pipeline and Hazardous Materials Safety Administration. What they do is regulate the shipment of hazardous materials and dangerous goods across the country.

I started my career there. I spent several years there. I started in their information center, which was a call center where people would call and ask you questions about the regulations. I then worked my way up into helping write the regulations and also doing the supporting analysis. My last role there was their Senior Regulations Officer. I walked transportation regulations through the whole process, from public comment to government review to publication and community outreach.

You get to see the sausage get made, and you’re part of that process. I also got to work on a lot of different cool projects. I worked on fireworks at one point in my career. I was doing international work and got to go to the UN in Geneva, but the biggest thing I got to work on was the crude by rail shipments that exploded in 2010. The number of shipments went through the roof with the advent of and widespread use of fracking. There’s a lot of crude oil that needed to be moved and went by rail. That posed some challenges. Part of the rulemaking that I worked on was creating the next-generation tank car to protect people from any derailment accident.

The railroads are looking at running their business, focusing on cutting costs and maximizing revenue. Click To Tweet

That got the interest of the association I’m with now, the American Fuel and Petrochemical Manufacturers. They moved petrochemicals that went in these tank cars as well as crude oil. When they decided to start up a transportation committee, that’s when I came into play. It’s been exciting because I got to be on the ground floor of them, developing a good midstream program, dealing with not only rail but pipeline and maritime issues, and the whole gamut of the supply chain.

I had not realized that that focus was so young within AFPM.

They’ve always dealt with supply chain and transportation issues. They formally set up a committee in 2017, and then that’s where I came in running that committee. What that did is it offered us dedicated resources from our companies, people who do this on a daily basis that we could reach out to and engage in and advocate for.

What role does AFPM play in the industry, particularly looking at chemicals and petrochemicals?

We’re one of the oldest associations in Washington, DC. We started in 1902. While the focus originally was more on petroleum products, fuels, and refining, it’s evolved as our industry’s evolved. In 2012, they rebranded into the American Fuel and Petrochemical Manufacturers. We were previously the National Petroleum Refiners Association. That change in name reflected the change in focus of the organization, looking more broadly at refining and petrochemicals together.

We do three things, advocate for our members, whether it would be fuels policy or on the petrochemical side, things like advanced recycling or chemical management, the Toxic Substance Control Act, also infrastructure permitting, and things like that. The advocate is the first leg of the stool. I’d say educate, and those are linked together.

 

Not only are we dealing with filing comments or working on the hill to get certain legislation passed. We’re also educating people about our industry and dispelling some of the misnomers about our industry. A lot of our time is spent letting people know what a petrochemical is, what it’s in, and how important our industry is to everyday life in the US economy.

The last piece I would say is being a source of information. AFPM holds a variety of conferences. We have a robust safety program that looks at ways to improve process safety. You may have heard of Walk the Line. That’s one of our big programs. Advocacy, education, informing, and information being a resource for that is what we do. All of that’s tied up in us being the voice of the petrochemical industry as well as the refining industry.

In fact, the industry needs a voice. I’ve read some of the AFPM materials and stuff. They liked the plastics. They like all the benefits that they have. They like the plastic phone, driving their automobiles, and living their lifestyle, but they don’t understand that its root can come from refining chemicals, petrochemicals, etc. Creating that awareness is critical.

One of our programs here is “We Make Progress”. Connecting the dots between the carbon molecule and feedstock and what it goes into is one of the big things we’ve been working on here at AFPM.

You testified at the Surface Transportation Board about the challenges with rail carriers. Can you tell us a bit about that?

First off, it was exciting to get to do that. As I mentioned, I’ve always been interested in rail, both the safety side and the economic side of it as an industry. Without being too long-winded, the rail industry has changed since 1980. In 1980, we had about 30 or 40 major railroads. We had major legislation passed that re-regulated how the railroads would be viewed, and that also included an economic regulator of the Surface Transportation Board. Between 1980 and 2000, we saw those 30 railroads condensed into 7 different railroads. From what we’ve seen regionally, there’s only one game in town when it comes to a major railroad.

With the supply chain, you're only as strong as your weakest link. Click To Tweet

This affects our members. Our facilities have to run on a constant basis. You can’t turn on or off a petrochemical facility or refinery. As we’ve seen the reduction and the number of rail carriers, we’ve had some challenges with service. Pair this with new ways the railroads are looking at running their business, focusing on cutting costs, and maximizing revenue. Pair that also with the COVID-19 pandemic. We’ve been in a situation where we’re seeing customers of the railroads with very much disrupted service, increased rates, and service days. We used to be served five days, and maybe we were only served three days. There are a lot of challenges.

AFPM is a free-market organization, but we’ve seen a deterioration of the free market in rail, and that’s where the STB comes from. It was good for us to be able to have this hearing because it shows that the regulators recognize there is an issue. It also was an opportunity for not just AFPM but other different industries to voice our concerns. Not only how it’s impacting us, but how that impacts the consumer, whether it’s the price of a petrochemical good or a gallon of gasoline.

I had not realized those numbers that we used to have 30 railroads down to 7 at this point. Although I should because my kids make me play ticket to ride, which, if you’ve ever played that game, they get pretty stealthy about what the railroads are and who controls it, which is a good proxy for real life. When I was working at Shell and Clariant, rail decisions were tricky, especially when we looked at facilities that were sole-sourced from a rail company. A lot of products across the chemical industry are considered hazardous and have different criteria. That’s gotten extraordinarily expensive to move those necessary goods.

With our facilities, we’re seeing it on both ends. We bring feedstocks into our facilities like crude oil or natural gas liquids, so we’re relying on it there and moving products out of our facilities. We ship over two million carloads as an industry every year. We rely heavily on a good rail network and an efficient rail network. While the hearing may have seemed contentious to some, we want everybody to succeed here because when the railroads do well, we do well as well.

AFPM is advocating for more competition, which rail is pretty capital intensive. It’s not easy to build a new rail. It’s a very expensive undertaking. Is it realistic to get more competition into railroads?

It is a capital-intensive industry, and there’s not going to be a new major railroad built overnight. We’re not expecting that to happen. What we are advocating for is some policies that would re-introduce potential competition back into the network. Specifically, if you saw the hearing, you heard a lot of reciprocal switching, which would allow and interchange you to transition from one railroad to the other. This would create a railroad to railroad competition. We feel and improve the network overall.

 

Also, with the lack of competition, or if there’s only one game in town, we need that regulatory backstop, so shipping rates aren’t escalated to the point that’s not fair. We’re looking for a fairer system. We have no delusions that they’re going to build a new railroad. We don’t think they should, but we do think that there’s a role of government to play to make sure that when you’re single served, you’re not going to be put in a position where you have no negotiating power and take it or leave it mentality.

What do you see happening next? What’s been the outcome of that hearing you participated in? Where do you see this going?

The hearing was on the 26th and 27th of April 2022. In early May, we saw the STB take their first step, and what they did, which is a great idea, is that they required certain railroads that were having some service challenges to develop service improvement plans. Part of these plans would say, “How are you going to address hiring? How are you going to address operating on-time performance?” Things like that.

That’s something in the short term that transparency and accountability are going to provide. They’re going to have to report this on a bi-weekly basis. If they’re not improving, people and the regulators are going to see. In the longer term, the Surface Transportation Board has been incredibly active.

There was a period when they didn’t do a whole lot. You didn’t see a lot coming out of them. That might have been a function of a more healthy and workable rail environment, but in the last few years, we’ve seen efforts to look at rate reform. How would you challenge a case if you think you’re being unfairly treated? There were efforts to expand the amount of data that the STB gets so they know what’s going on in the network, particularly in the first and final mile of a trip, which is where we see a lot of the issues.

Those are two big things. The reciprocal switching is something that the new administration is interested in that it’s been mentioned even by the White House Press Secretary. You could see something there. We’re very busy, and so is STB. We appreciate their renewed focus on this area. Our hope is that we have some short-term fixes with what they’ve done now, but that we might have some long-term fixes that could keep us from getting into this issue where services deteriorated to the point that is impacting the economy so it doesn’t have to happen again in the future.

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Since the start of the pandemic, the supply chain has become a household word that it never was before. Everybody’s aware of supply chain challenges, and the rail industry is right at its center. It moves so many products of all varieties, finished goods, raw materials, etc. Where does marine transport fit into this? Are you guys engaged in that at all? The other thing that we see a lot of is disruption constraints from the marine. These containers coming to the US that are trying to get onto a rail car and containers are starting to leave the US are sluggish.

The supply chain is only as strong as your weakest link. I’m not going maritime as the weakest link by any means, but there are maritime issues. It’s interesting because it’s a similar setup and situation to the railroad, where we’ve seen a lot of consolidation in the rail freight industry. We also have had an agency to be the watchman of the Federal Maritime Commission, similar to the Surface Transportation Board. We’ve partnered with other trade associations. You talked with Eric Byer at the National Chemical Distributors and the American Chemistry Council.

We signed on to a couple of different letters to the Federal Maritime Commission asking them to look at ways to address exorbitant rates or detention fees and things of that nature. There was the Ocean Shipping Reform Act. AFPM didn’t actively advocate for it, but we do support a lot of the principles that are in there.

On AFPM’s side, we have been focused a lot on permitting, particularly widening and dredging ports. You have your container shifts and also your ships that ship crude oil, natural gas, or refined products. They’re all competing for this same port space, which is wider and deeper ports. That requires a lot of time for the Army Corps of Engineers. We’ve been focused on making sure that permitting process goes through well.

Do you guys see movement there? Do you see the permitting process moving out or accelerating in that space?

There is interest in the waterside, with the Water Resources Development Act passed a couple of years ago. The new version of that was just passed. A lot of it is getting beyond the government bureaucracy, which some of the more recent legislation has done. Permitting on the pipeline side is the counter to that argument. We’ve seen it will get harder to permit a pipeline, which is a completely different issue, but one that our members are very interested in nevertheless.

 

That’s what I hear when I talk with clients all over the different value chains. Permitting is a big issue. It happens every time you go through an administration change. There are different points of view and people that get brought. It’s certainly the timing of these permitting issues, and the slowness in the system has not been great.

You’ll see the regulatory whiplash between administrations, and we’ve seen that. You’re seeing a little bit more focus on moving energy products, particularly in light of some of the energy supply issues related to Ukraine. That’s unfortunate, and that’s what’s bringing these conversations up. Our members want to move materials in the safest way possible. Streamlined but robust permitting is the best way to do that. We’re going to advocate on behalf of that and continue regardless of who’s in office.

Greenhouse gas emissions, sustainability, and the whole ESG landscape have changed and have accelerated over the last couple of years. It’s a key topic in the industry with people I talk to and work with. Often AFPMs constituents are viewed as reluctant participants in sustainability and making forward progress. What role does AFPM play in this space?

We mentioned the overall roles that AFPM plays and those applied here, advocate, educate, and inform. Our members are faced with that stigma of where we’re at in sustainability. AFPM has taken a big role in promoting what our industry is doing. A few years ago, we issued our first industry-wide sustainability report. There are some very specific metrics. For example, you mentioned GHG. We show the reduction in GHG that our industry has been part of by adopting new technologies. What we also took the approach of is to tell a little bit more of a story.

AFPMs sustainability report mirrors our sustainability pillars, and there are four of them. There’s environmental stewardship. Within our fence line, it’s what we can protect as far as emissions and plastic waste things of that nature. Health and safety would be the second pillar, which is protecting the people who work for us and the communities surrounding us. The third pillar would be thriving people in communities, and that’s more of the philanthropic, or building up the areas we’re in. We pay a ton of taxes that are then used to facilitate growth in our communities.

The last one is a little bit amorphous, but very important is driving progress. What are our products? For example, plastics are used in a variety of things like solar panels, windmills, or light-weighting in the car. What do our products do that make other products better? As I mentioned, a few years ago, we issued our first sustainability report. It includes a lot of narratives, like the stories of our members and what they’re doing in these four different areas.

Eighteen states have passed rules that treat advanced recycling as a manufacturing process. Click To Tweet

I was proud to be a part of that. This past March 2022, we issued that second report. We’ll continue to do that. On the policy side, we advocate for policies that we think will improve sustainability. On the fuel side, we advocate for higher octane fuels that are the equivalent to two electric vehicles in a lot of situations as far as the overall life cycle footprint. On the plastic side, we’ve been a big advocate for advanced recycling. We understand traditional recycling is part of it, but to meet some of the lofty goals that consumer brands have, we’re going to need to pair that traditional recycling with advanced recycling.

We feel like we have the experts on both sides, whether our experts in refining or the petrochemical side, to solve some of these complicated challenges. There are other things too, like carbon capture and hydrogen, that our members are very interested in. The idea that sustainability isn’t ingrained into our culture is inaccurate, and I encourage everybody to go to our website and check out the Sustainability Report we put out.

Seventy-five refineries have shut down since 1991. I know that because I spoke about that to somebody. One of the interesting things is that those facilities are getting turned into renewable diesel and other things. It’s an evolution of assets and products and how to better engage with consumers and constituents to fit the current needs of our world.

We get announcements, and you hear them every day. Whether it’s sustainable jet fuel or bio-diesel, our members are constantly looking at ways to make better and cleaner fuels. That won’t stop. That has to continue.

How does AFPM work with ACC and other industry groups? There are a number of them out there that touch chemical companies and distributors. This is always one of my great mysteries about the inner workings of industry groups. How do you guys team up together? It sounds like in the case of the maritime, you let NACD and others in the lead, but how do you work that out?

We have a good relationship with associations and staff. We understand where some associations might be better suited on an issue than others. We talk quite frequently, and a perfect example is the rail issues. If you look at a lot of these proposals in front of the Surface Transportation Board, a lot of them will file comments jointly. That requires a lot of collaboration, not amongst the staff of the associations but the membership.

 

For example, The Fertilizer Institute, American Chemistry Council, and AFPM put together a proposal on that first and final mile of real data. We worked hard for several months and had a real robust proposal. We’re hoping to see that through. The bottom line is having that relationship and realizing that the more voices, the better in a lot of these discussions.

Advance recycling is another great example. There are a lot of pushbacks on that. ACC is out there talking about it, with AFPM talking about it too. Hopefully, we can change some minds and give people the information they need to make an informed decision. While there are a number of trade associations, we work well together, and we’ll continue to do so to make sure our industry is strong and stays that way.

Advance recycling seems to be gaining more acceptance as it keeps seeing state-by-state agreements. It seems to support advanced recycling, which is needed. We can’t get to the world of the future without making some changes.

There is a McKinsey report that put a number on it that said, “Without X number of growth in the advanced recycling industry, you’re not going to meet the targets you need to get.” Now, consumer brands are putting goals out there. They want 100% recycled content to provide that supply. You’re going to need both mechanical and chemical. We’ll continue to push for that.

What’s next on the AFPMs agenda in 2022? What else are you guys focusing on? What should we be looking for?

I think of the big issues that are facing our associations. There are probably many associations, and the Security and Exchange Commissions’ new reporting requirements are proposed now for environmental to social governance issues. That’s something our members are very interested in. I’m not as involved in it as AFPM, but the renewable fuel standard is always a major issue for us.

 

On the rail side, it’s now more than ever a momentum. I can see some of those crossing the finish line and breaking the tape for the rest of this year. That’s a couple of things off the top of my mind that we’re looking at. In advanced recycling, you mentioned that eighteen states now have passed rules that treat advanced recycling as a manufacturing process as opposed to a waste or incineration process.

Pushing that on a federal level would be important to get a federal program instead of a patchwork of different states in doing so. The last thing I mentioned on the petrochemical side, one thing we’re also looking at is the United Nations Environment Assembly is pursuing a global plastic treaty. At the end of May 2022, there’s going to be the first meeting of those groups. AFPM welcomes those conversations and works to make sure that the plastic treaty considers the benefits of advanced recycling and things like that.

That’s going to be impactful. We need to make sure that it’s handled and approached appropriately and gets all points of view in there so. Rob, thank you. I appreciate you taking the time to talk with me. I appreciate you joining us on the show.

Thank you. It’s great being here.

 

Important Links

• American Fuel and Petrochemical Manufacturers
• Walk the Line
• Eric Byer – Previous Episode
• Sustainability Report – American Fuel and Petrochemical Manufacturers
• https://www.LogisticsMGMT.com/article/stb_issues_service_directive_to_u.s._based_class_i_railroad_carriers

 

About Rob Benedict

Rob Benedict is Vice President of Petrochemicals and Midstream at American Fuel & Petrochemical Manufacturers (AFPM), the trade association that represents the makers of the fuels that keep our country and the world moving and the petrochemicals that are the building blocks for modern life. In this role, Rob develops association policy on Congressional legislation and regulatory matters and advocates for AFPM member companies by communicating their key role in the supply chain and their efforts to improve the safe and efficient transportation of essential products. Rob co-leads AFPM’s sustainability program which promotes the Fuel and Petrochemical Industries’ commitment to being part of a sustainable future.

 

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